Hot answers tagged acquisition
33
It strikes me they're looking for two things:
Your product, so they don't have to develop their own.
Your expertise with your product, so you can maintain and improve it for them.
Those are two quite different value propositions: there's value in your product by itself without you, and there's quite separate value in you continuing to develop it on their ...
18
Get out your employment contract with Big Company X. Read it.
NOW.
It doesn't matter what they've said to you, or whether they've been cool in the past with your side project.
What matters is the terms of your employment contract.
Because every employment contract will have some clause about what work of yours belongs to the company, and what belongs to ...
11
I'm sorry I don't have more time to answer your question in detail right now, but one additional thing I think you should consider when making your decision is this:
You've got the entrepreneurial spark in your blood - this is clear. You've created, you've shipped, you've become cash flow positive. You've got an offer. If you sell it, you have the gold ...
9
First, every startup can be imitated, so don't let that worry you.
Here's what I like to do: Define your "perfect customer." The person who has every single pain you solve, in the most extreme way. Call this person "Carol."
Now ask: What would you put on your home page that would make Carol understand immediately that you are her savior? What would you ...
6
In terms of your planning for getting purchased, my personal opinion is this is absolutely bottom of your list of things to worry about. You haven't started yet, you're getting ahead of yourself.
Just make sure your company is formed correctly, everything you do is legal and that the company clearly owns whatever is created.
My advice would be forget ...
5
So there's no strike price, is there a vesting schedule? It may be that you were automatically granted them without having to do anything.. if that's the case, I'd wager there are tax implications.
Regardless, usually when a company is acquired, the acquirer wants to own 100%. When it comes down to it, each of you has a (small?) claim on a chunk of the ...
4
My first concern would be that Big Company X probably had you sign a contract in which you agreed to give them ownership of all of your intellectual property. They may be of the opinion that they own your side project, if they become aware of it. Big Company X just sniffing in your direction could scare off your buyer -- I'd be all over getting legal advice.
...
4
I'm from Flippa and would endorse most of the comments here. I'd expect it to sell for around the $2,000 mark but it would depend on a number of factors. This would include level of audience engagement (eg do they hit one page and leave or do they come back regularly for extended durations). The medical/health niche is furthermore quite broad - the specifics ...
4
If you had asked "Should I be acquired or raise money," you'd have a hopeless question there. The only possible answer would be "it depends."
Luckily for you, you asked a different question: if the angel investor's valuation is $5m post, what should be the acquirer's valuation? That's a really interesting theoretical question and one which, I think, I can ...
4
That is a common mess with a lot of websites, and forums (or so called web communities / portals). In my own experience you must get written consent from all parts OR the one that sell the site must have written consent.
Written consent from the domain name owner. Later you need his help to transfer the domain to your own control.
Written consent from who ...
3
I'd agree that it's probably only worth $2,400 (24x multiple of your monthly revenue). But with that said, are you able to sell any products on the site? If you have 300 people hit the site can you can get a 1% conversion on a product and earn $10 commission you'd instantly 9x your revenue. Then you could sell it $21,900.
To get a premium price, instead ...
3
The best (and I would argue the only) way to know what it's worth is to put it on the market.
For example you can list it on Flippa.com. Put a reserve price if you don't want to sell under $n.
I believe it's the only way to get a real number.
By the way it seems to me (based on browsing flippa.com prices) the multiplictor number (market value / current ...
3
All the other answers posted here are great, and I want to add a couple more thoughts.
It sounds to me like a big question for you is how much do you really want to sell and cash out, and how much do you want to keep working on it yourself? And how much do you want to be an employee of another company rather than doing this yourself and maintaining ...
3
I am a business attorney and not a tax professional but unfortunately, all income is reportable and taxed unless you can find an exemption. I don't know of one in your scenario.
Long-term capital gains are determined by the amount of time you held your investment. So, if you sold your stock in the company during the acquisition and the date on which you ...
3
First, congrats on choosing an established market. This means people are already interested in your idea, they just don't know about you yet.
Your problem is one of audience awareness. You've got to find where your audience congregates (where their watering holes are) and approach them there. What blogs to these folks read? What forums do they ...
2
Anywhere from 1 month to 9 months, depending on the following:
Managements desire to do the deal (on both sides)
Funds for the deal are in place
You can agree upon a price and terms
Due diligence shows no surprises
The costs vary depending on the deal size and the amount of lawyer time. I would recommend you put a cap on it during your negotiations. As ...
2
I would not touch this "opportunity" with a 10 foot pole.
Family run company - lots of bagage you don't want to deal with.
Married couple with no deep experience - RUN!
Recently acquired company - current customers might be loyal to previous owners and don't want to deal with newbies.
Equity.
Sounds like you really should be starting your company ...
2
As Gary and Keith have already said, maybe a startup's code and other assets can be sold.
In principle there is nothing special about selling the sourcecode, copyright, and any other rights to a codebase developed by a failed startup. You'll need to decide between selling the whole company, and selling just the product. In both cases the trick is to find ...
2
The short answer is 'it depends'.
Any software you create is intellectual property (IP). The value of IP is whatever someone is willing to pay for it.
Significant pricing factors usually include things like the quality of the product itself (end user experience, utility, sophistication), the quality and documentation of the source code, the ...
2
"What I believe differentiates me is that I do not have to charge these businesses a fee to use my service."
You didn't say what the others pay. If it's very small then I'm not going to switch... would you change cable or phone provider to save $5 a month? (or even $10 if it only costs $10?).
If it's significant and they're willing to pay it then why be ...
2
As a rule of thumb, if you can get about 50% of your recipients to reply to the unsolicited emails, then it's probably OK. Any less than that, and it's spam. That means you better be super careful about who you target and make sure you're really targeting people that genuinely interested in what you have to offer.
For example, if I were hosting a party, and ...
2
Join an online group for the kind of business you are targeting. There are many on LinkedIn. Contribute something to the group - your ideas, helpful hints, etc. Only then, after people know and trust you, should you gently mention your service and put a link to it. Get comments from people who sign up about what you can improve.
2
I can answer two of these:
(1) taxation: if you're selling your shares/membership interests/equity in the LLC, if you've held them for I believe 2 years, you'll get capital gains treatment, rather than ordinary income treatment, and capital gains treatment will be favorable for you.
(2) don't get a lawyer involved yet- hash out any business terms (or at ...
2
One book of interest to you will be this one: Bootstrap: Lessons Learned Building a Successful Company from Scratch. Hess talks about his own personal experience of going from full-time employee at HP, to planning a side-project after work, to leaving and starting his own company, to selling that company. Lots of sage advice in there.
Some points that are ...
2
That depends. Chance is your offer letter is not legally binding in any way (it already says "subject to approval by the board of directors") so it's really up to them to do whatever they want, knowing that if they screw you over too badly, you'll quit.
Most likely you will receive a stock option grant in the mothership that is comparable to the stock ...
2
There are two possibilities here.
The first one is where he signed an option agreement that clearly specifies that if there's an exit, his un-vested options vanish. In that case, he's stuck. In any case, he needs to watch out for that in future startups.
The second one is where the option agreement doesn't clearly specify what happen in an exit. In that ...
2
This is shocking, and as far as I know, very unusual.
Look into the key paragraph in the stock options agreement. It comes on page 3, and up to that point, everything looks like a boilerplate stock-options agreement:
Participant Acknowledgment and Management Partnership.
The Participant hereby acknowledges receipt of a copy of the Plan. The ...
2
It can be the best answer if you can get it going properly.
These days it's called going viral but that is just word of mouth with lots of people.
The real question is how do you kick it all off? If you have an App that people are willing to talk about like Angry Birds then it's by far the best strategy.
If your app is more of a pedestrian but useful ...
2
I don't think you necessarily need to explain the details of their working relationship with you. Worst case they work 20 - 30 hours a week night and weekends on your projects after they get home from their normal jobs. There are lots of people who sub-contract / moonlight. As long as those resources are actually available to you and work on your clients ...
Only top voted, non community-wiki answers of a minimum length are eligible
